McALLEN - Industrial real estate activity continues on a good path as the McAllen industrial market produced a third consecutive quarter of positive net absorption, according to CBRE’s 2Q 2014 Industrial MarketView.

The net absorption of 298,896 sf sets a new 11-quarter-high dating back to 3Q 2011 and keeps the transitioning market afloat.

The current vacancy rate of 12.0 percent is up 50 basis points (bps) quarter-over-quarter and 200 bps year-over-year. Despite the higher vacancy rate, the consecutive positive net absorption benefits the transitioning market after a handful of large vacancies pushed the vacancy rate up in 2013.

Q2 2014 recorded an increase of $0.06 per sf in the average annual asking industrial lease rate from $3.83 to $3.89 per sf. Although the vacancy rate sits at 12 percent, the market remains relatively active, which continues to marginally increase asking rates.

The supply of industrial buildings in McAllen increased in 2Q 2014 with the addition of two existing buildings that were previously not tracked.

This quarter also saw the delivery of 348,000 sf for Royal Technologies in the Mission submarket, making it the single largest construction project seen since 2005.